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Investing for Beginners

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https://www.thebalance.com/investing-for-beginners-4074004

thebalance.com

Investing for Beginners
It's never too early or late to start investing! Learn how to invest in stocks, bonds, mutual funds, index funds, real estate, and more. And find out how to analyze companies and stocks to see which are worth your investment dollars.

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Investing defined

Investing is about laying out cash or assets now, in the hope of more cash or assets returning to you tomorrow, or next year, or next decade.

Most of the time, this is best achieved th...

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Productive assets explained

  • Productive assets are investments that internally throw off surplus money from some sort of activity. 
  • Each type of productive asset has its own pros and cons, ...

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Investing in Stocks

  • It means investing in common stock, which is another way to describe business ownership or business equity.
  • When you own equity (the value of the shares issued by a company) in ...

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Types of business equity investments

  1. Investing in Privately Held Businesses: These are businesses that have no public market for their shares. They can be a high-risk, high-reward proposition for the entrepreneur.

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Publicly traded stocks

If you are the type of person that likes companies that are stable and gush cash flow for owners, you might be drawn to 

  • blue-chip stocks,
  • dividend investing,

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Investing in Fixed-Income Securities (Bonds)

  • When you buy fixed income security, you are really lending money to the bond issuer in exchange for interest income.
  • You can buy certificates of deposit or money marke...

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Investing in Real Estate

Real estate investing comes down to either developing something and selling it for a profit or owning something and letting others use it in exchange for rent or lease payment.

It can ...

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Owning Assets

Once you've settled on the asset class you want to own, your next step is to decide how you are going to own it.

If you decide you want a stake in a publicly-traded business, do you...

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Outright vs Pooled Ownership

Outright Ownership: You will buy shares of individual companies directly. To do this right requires a certain level of knowledge.

Pooled Ownership:  You mix your m...

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Decide Where You Want to Hold Those Assets

Your decision can have a major impact on how your investments are taxed.

Choices include taxable brokerage accounts, Traditional IRAs, Roth IRAs, Simple IRAs, SEP-IRA, and maybe even f...

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SIMILAR ARTICLES & IDEAS:

Common investment questions

Common investment questions

Two of the most common investment questions are "what do you invest in " and "what are the best investing strategies"?

The best investing strategies are...

Shady investment advice

Bad investing advice can come from many quarters, such as wealth expos or financial advisors. If anyone promises you any type of return over 12%, 99% of the time, they are probably playing you.

There are great financial advisors out there, but many people who sell investment products just want your money. However, it's not that hard to invest for yourself.

How to avoid bad investment advice

  1. Never buy a financial or investing product from someone you just met.
  2. Getting returns over 12% per year is ridiculously hard. If it sounds too good to be true, it is.
  3. If you don't understand it, don't invest in it.
  4. If one of your friends recommends an investment that's making them a lot of money, they are probably suckers too. If you see the "results not typical" on any marketing materials, move on.
  5. There are no "secrets of the super-wealthy" that anyone will sell you for $500 or that you can take advantage of unless you have hundreds of thousands of dollars.

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Investing

... is the trading of your money today for a lot more money in the future. It is a high yield over the long term.

What happens to your money

Banks don’t like to give away their money. That mindset is reflected in the interest rates of checking and savings accounts of 0,5% and 0.9% avg. annual interest respectively.

When you deposit your money in the bank, the bank turns around and invests that money at 7% a year or more. After they collect their profit, they give a tiny shaving of it to you.

Portfolio and Diversification

  • Your portfolio reflects your long-term wealth building investment strategy – not the short term. It includes everything you own. Your retirement accounts, your investment accounts, even your home are types of investments.
  • Diversification is a way to describe owning multiple types of investment assets. Diversification is smart because you both protect yourself from failure and position yourself to take advantage of multiple robust methods for building wealth.

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6 ideal investments for beginners

6 ideal investments for beginners
  1. If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money— especially if your company matches a portion of your contributions.